WASHINGTON | By Pablo Pardo | Steven Cohen, James Simmons, Ray Dalio, John Paulson… And, above all, of course, Julian Robertson and George Soros. Hedge fund managers have been lionized, adored, despised and hated. And for good reason: the success of those investment vehicles is unparalleled. According to the New York Times, there are currently 10,000 hedge funds in the world, and the number is growing, with assets worth $2.8 trillion (€2.2 trillion).
WASHINGTON | By Pablo Pardo | Why do they call Economics the Dismal Science? In theory, because it is about using limited resources to satisfy unlimited needs. In practice because, no matter what, everything is always bad in Economics. Case in point: cheap oil.
WASHINGTON | By Pablo Pardo | Do you want a Who’s Who of the Republican talking heads? If so, go to this list. Those are the luminaries that asked the Federal Reserve not to go ahead with the Quantitative Easing in 2010, for fear of inflation and currency debasement. Four year later, inflation is nowhere to be seen, and, according to the IMF, the US dollar has strengthened its role in the monetary system.
WASHINGTON | By Pablo Pardo | Lefty populism is on the rise in Spain, helped by the financial crisis, and a cascade of scandals that has so far tarnished all the traditional (i.e., pre-existing) parties from the Left and the Right. Podemos, the leftie, Hugo Chávez-inspired party that advocates defaulting on the Spanish debt (to the delight of The Financial Times) could win the elections, according to some polls.
WASHINGTON | By Pablo Pardo | Having €2.83 trillion in the bank and not knowing what to do with it is a problem that everybody would love to have. But it is actually a really serious problem for 316.1 million Americans, especially for those whose income increased by 0.43% in 2013. And, by extension, for the other 6.8 bn of human beings in the planet. Behind this problem there is a lack of investment opportunities, without which investment in the US will remain in a state of weakness and heavily dependent on an inability to increase consumption.
WASHINGTON | By Pablo Pardo | In the 1Q14, companies at Standard and Poor’s 500 spent more money to repurchase shares in comparison to the profits they had made during that period. And third quarter data point in the same direction. Large American firms do this for several reasons, such as inflating their share price –because, the fewer number of shares, the more profits per share they’ll have, which in turn benefits managers, who receive financial compensation in the form of company shares.
WASHINGTON | By Pablo Pardo | Since the inception of constitutions in modern nation-states, none have undergone such turbulence as those drawn up in Europe. The raison d’être of the European Union is to avoid further turbulence in the future. It is no coincidence that the violent conflicts that have broken out in Europe since World War Two have been outside the EU, in former Yugoslavia, Ukraine, Russia, and Georgia.
WASHINGTON | By Pablo Pardo | Geopolitics have returned with a vengeance in Europe right when Barack Obama’s economist view of international relations seemed to be on track with the negotiations for the Trans-Pacific Partnership (TPP) and the Trans-Atlantic Trade and Investment Partnership (TTIP). The IMF warns that geopolitical risk is back on stage.
MIAMI | By Pablo Pardo | The director of the IMF’s Department of Financial and Monetary Affairs, José Viñals, has declared himself “worried” about “the optimism of the financial markets.” Viñals made his remarks at the LSE Global Pensions Program, organized by the London School of Economics, Santander Asset Management and Novaster. To an audience of around one hundred pension fund managers and regulators, most of them from Latin America, the IMF official remarked that “everybody investing” in what he called “heterogeneous assets” has “made money” this year, in spite of the fact that the “economic news, ‘surprises’ have been relatively bad.”
WASHINGTON | By Pablo Pardo | Mark Zandi is chief economist at Moody’s Analytics, the department in charge of consulting, advising and providing services for businesses and financial institutions. Among its many activities, the firm advices several European banks with regard to the EBA’s and ECB’s stress tests. Moody’s created this department in 2007, after buying Economy.com –Zandi’s analysis company.